Kenya Plans to Raise Tax-Free Income Threshold to Ksh36,000 in 2024, Aiming for Ksh45,000 by 2027

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Kenya Plans to Raise Tax-Free Income Threshold to Ksh36,000 in 2024, Aiming for Ksh45,000 by 2027

Kenyans with monthly earnings of Ksh36,000 may soon see tax relief, according to statements by Dr. David Ndii, Chair of the Council of Economic Advisors, on Wednesday, November 6. Dr. Ndii disclosed that the government plans to increase the tax-exempt income threshold from Ksh24,000 to Ksh36,000.

Addressing attendees at the 2024 NCBA Bank Economic Forum, Ndii indicated that the government is exploring tax relief options for Kenyans as outlined in the Finance Bill 2024.

“We are raising the tax-free threshold from Ksh24,000 to Ksh36,000, potentially within the year. If you review the Finance Bill 2024, you’ll find the proposal to adjust this limit is included,” Ndii explained.

He further mentioned that the government aims to raise this threshold to Ksh45,000 over the next three years.

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“In three years, this threshold is expected to reach around Ksh45,000,” Ndii added.

The economist noted that the relief targets lower-income earners, aiming to reduce the tax burden on individuals at the lower end of the wage spectrum.

“As more people come into the tax fold, we can extend greater relief to salaried workers,” Ndii added.

However, Ndii cautioned that the relief may not be immediate, citing constraints under Kenya’s current International Monetary Fund (IMF) program, which limits tax cuts.

“As long as we are under the IMF program, significant tax relief will remain out of reach. We can only consider substantial relief once we’re free from IMF oversight,” Ndii emphasized.

These remarks come as the government reintroduces elements of the Finance Bill to help secure at least Ksh174 billion in additional revenue. Ndii highlighted ongoing reforms aimed at distributing the tax burden more evenly across all income groups.

Kenya Plans to Raise Tax-Free Income Threshold to Ksh36,000 in 2024, Aiming for Ksh45,000 by 2027

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